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Abstract

The growing interest among consumers in the link between diet and health makes functional food one of the fastest growing sectors in the global food industry, especially functional dairy products. Understanding consumer choices with respect to functional food is an important and relatively new research area. Given the credence nature of functional food attributes, labelling plays a key role in allowing consumers to make informed choices about foods with enhanced health attributes. In 2007, Canada launched a review of the regulatory system for health claims on functional foods, which included rules concerning the approval, labelling and verification of health claims. In 2010 two new health claims related to oat products and plant sterols were approved by Health Canada. An analysis of how consumers respond to health claim information is therefore timely.
This thesis focuses on examining the effects of different types of labelling and verification of health claims on consumers stated preferences for a specific functional food product, Omega-3 milk. The analysis incorporates reference-dependent effects. This study improves the knowledge of Canadian consumer understanding of health claims and the impact of health claims on consumer choice. This research is one of the first studies to simultaneously examine the effects of different types of health claims (e.g. function claims, risk reduction claims and disease prevention claims) and other ways of signalling or implying health benefits (e.g. symbols) on Canadian consumers' functional food choices. This study contributes to the knowledge in this domain by providing a comparative analysis of different types of labelling strategies. The extant knowledge of labelling effects in the formats of risk reduction claims, disease prevention claims and symbols or imagery on functional foods is limited. One of the primary contributions of this study is addressing this gap in the literature.
The theoretical framework of this thesis is based on random utility theory. A stated preference choice experiment is designed to examine consumers' response to Omega-3 milk under different labelling scenarios. Using data from an online survey of 740 Canadians conducted in summer 2009, discrete choice models, including Conditional Logit, Random Parameter Logit and Latent Class models, and Willingness-To-Pay (WTP) values are estimated. The results suggest that full labelling (function claims, risk reduction claims and disease prevention claims) is preferred over partial labelling (e.g. the use of a heart symbol to imply a health claim), but primarily for risk reduction claims. There is no significant difference between a function claim, such as "good for your heart" and partial labelling in the form of a red heart symbol. The results also suggest that consumers on average respond positively to verification of health claims by government and the third party agencies, however, the Latent Class models reveal considerable heterogeneity in consumer attitudes toward the source of verification. The influences of key-socio-demographic (e.g. income, education and health status) and attitudinal factors (e.g. attitude, trust and knowledge) provide further insights into consumer responses in the choice experiment to identify different consumer segments. Moreover, the results reveal reference-dependent effects where perceived losses of ingredient or price attributes have a greater influence on consumer choice than perceived gains.
In terms of industry and public policy implications, this study suggests that food manufacturers in Canada would benefit from the ability to make more precise health claims. The implications derived from the Latent Class Models could help the Canadian functional food industry to identify target consumer segments with different characteristics for the purpose of developing marketing strategies. Furthermore, the results of this study suggest that Canadian consumers are receptive to both full labelling and partial labelling. It indicates that public policy makers need to pay attention to effectively regulating health claims for functional foods so as to balance the need for credible health claims to facilitate the development of the functional food sector with the imperative of protecting consumers from misleading health claims. Public policy makers should also be aware that the verification of health claims plays an important role in reducing consumers' uncertainty and making health claims more credible.